scarlet: welcome to "bloomberg markets." we have the s&p 500 right now up just marginally, barely moving, but still above the 5220 level at the moment. there's a lot of anticipation ahead of big data points that obviously begins and doesn't end with the c.p.i. number. it is expected to show inflation air numbers have eased, but still very high. the nasdaq 1100 gaining more, up a quarter of 11%.

yields coming down, the 10-year right now coming down to 4.85%, and new york crude gaining ground, up 11%, of course, a source of some inflationary pressure. and some midday movers on the equity side, we're looking at shares of apple. people familiar with the matter tell bloomberg it is closing in on an agreement with open a.i. to use the startup tech on the iphone. the two sides have been finalizing terms for a pack to use chat gpt features in apple's next iso. tesla hiring back some of the almost 500 members of its super charging team that were dismissed last month. they're being embraced as the industry standard with competitors adopting its tech. let's go now to bloomberg's john farrow at the summit. >> scarlet, thank you. alongside me, the bank of america chief. good afternoon. it's not bad, is it? good to see you, somewhere different. president macron, is he trying

to sell you a french bank, what's happening here? >> no, he's not trying to sell it. what he's trying to sell is doing business in front. we have moved from 1100 people here, about 750 people under the broker dealer, and they've been great and accommodative. the rules and stuff, it's been a great experience for us. jonathan: what have they done to attract the investment from you? >> we needed attempt, because we were locating jobs. some people moved, some people didn't, so they have a lot of talent. they know the trading business because the large french banks and regulatory framework. they made it accommodative to bring it over, and then they made some changes specific to our employees. they're always ready. now they're trying to say can you move it back off? thief done a good job and changing france's reputation around the business community. they expanded this.

jonathan: the reputation used to be terrible. why would you hire anyone in france when you can do that in london? was it brexit that changed that in the last 10 years? has france actually got better as owe poised to the u.k. getting worse? >> they're accommodative. they had the talent and capability. schools could expand and take people. those are real things. what they do did, they said we need to be attractive, so they lowered tax rates, they worked on some of the work rules. those are longer term strategies that will help the country. jonathan: let's talk about the united states as well. i got a note from the bank of america institute from liz, the great work they do there, and the average balance for a customer compared to the average back in 2019, and for lower income, the numbers that you got show it up close to 60%. what on earth is going on? how are the balances that much higher now versus, say, five years ago? >> the thing is it lived through the stimulus benefits and

deposits, has also been working since 19, therefore they've gotten wage increases. while inflation is tough on people, especially in the lower medium income and down, the wages have been growing. they just grew first, honestly. people don't remember the gauge growth so much. but it shows the resilience of the american consumer. if you look at the spending through the month so far in may, they're spending about 3% or 4% more in the last part of may. april is similar. it's slower, more consistent with lower inflation economy, but still positive. positive means people are spending more. that means our economy is growing. the rate structure may be higher, and we can talk about that, but the rally is in decent shape. jonathan: are we living well with interest rates north of 5%? >> we're living pretty well with them, and people are getting used to it, but the reality at some point they have to get the normalized curve.

an inverted curve forever doesn't sort of economically compute. our team thinks the rate they'll get to will be 3.5% as opposed to the 11% range. we haven't really had that since before the financial crisis. there was a moment where they raised rates and always started bringing them down to 19. frankly, in our team, if you're under 40, you've never seen this kind of rate environment, and this is normal. 3% front end, 3.5%, people will get used to it, because america did a lot of economic activity prior to 2007. so people are used to it, it's just we're in a very unusual time. the adjustments are taking place. jonathan: we're hearing from some companies that maybe there are cracks, mcdonald's and starbucks offering a similar view on the u.s. consumer. you've got 69 billion customers. what do you see? do you see the cracks emerging this year? where have the cracks emerged?

average account balances are 175,000 and below, they're higher than the pandemic by a lot. if you think about the spending, it settled into where it was in 2016, the fed was raising rates, inflation, they're pushing it down, holding it steady. that's normal. this was a credit low, and basically last quarter we were a little bit higher than that. so we're normalizing, so it's increasing off of base and people say, oh, charge ops are getting back to where they were, and frankly, people thought that was very good credit, and it factually was. the question is where do we go next. they're either not growing, or they're staying, that's good news on the consumer side. it's all ok. higher rates are tough on people. higher rates are tough on corporations using it less, because medium sized companies, because it costs more, and if it

costs more, you got to be more judicious about it. that kind of adjustment, what the fed is having, is having the impact they want. on the other hand, the economists are there, and now we got to be careful not to overshoot the other way. right now there's no landing, because you can't say it's a soft landing. that's been pushed out and pushed out to when it occurs. we got to be careful we don't overshoot. you see the consumer confidence numbers tipping down. that's what you got to be careful of. the consumer leaves, it's hard to get restarted. jonathan: i look at your consumers and report on your numbers, we look at the average fico score of some of the lending that happens, and it's really, really high, like close to 800 for vehicles. can you tell me whether this is a decent snapshot of america or whether you're catering to a much higher quality consumer? >> on the lending side, we're super prime in auto. there's a broader base of consumers out there. 80/20 rule, and we don't play in the sub prime at all. that's because of history and

how we got here. on the deposit side, completely different. we open accounts for anybody that wants an account. we're a great starter place for people to open a starter account and grow with us. we open a million of them over the last 12 months. they start at 3,000, go to 7,000. that's pretty representative of america. more than 90%, the core household account, meaning it's used for day-to-day. on the lending side, we probably tilt just a little higher, but it's still strong. but 80% of america is prime space, so the difficulties you're hearing about, i can't really reflect on, but they tend to be in the sub prime space. jonathan: let's talk about businesses. we're seeping a data of issuance. supply is through the roof for q-1. we've been trying to work out whether that's pulled forward from the back end of this year or catch up. which one is it? >> if you did a lot of financing and it's coming up in the next couple of years, your hope would

be rates would fall and you'd get a lower nominal rate. the problem is we're not sure that's going to happen. now people are saying i don't want to run to the wall and find out the market closes because some external event or something. people are just financing. there probably was pull-through of the year when people said rates may not go down, just get it down and get it over with. this is fascinating, the first half of the year is always active, and you keep saying there's four quarters. it's just natural human behavior. people like to get things done. i think it's been pretty strong, we had a good investment banking fee, which is equity and debt. i'm not sure there's any right answer there, but the reality is it was very high, so the consumption is lower. but on the other hand, people have to look forward and say am i going to wait till 2026 to refinance that debt, or frankly, they're investing, there's lots of capital improvements going on. there's lots of m&a starting to

kick up. there's stuff going on too that requires them to raisin creptal new money. jonathan: can we touch on m&a? we talked about this a few months ago, and you talked about the reality for some companies that can't make deals because they don't know if they'll close. do you sense there is some momentum in the business now going into november, or is there a sense that people are just going to wait to see how this washes out? >> the activity is very high. a lot of conversations, deals being signed up. the concern still applies of whether deals would appear to any other in the past, gone through without challenge and delay. to stay with a deal for a year-plus takes a lot of inten fortitude. a lot of things can happen in the company. people can lose enthusiasm for the deal. all things can go on. people have to say can die that. large companies can hang on longer, because they have more resiliency. but a company might be 30%, 40%, they have to be very careful, and they're cautious.

they want to do it, but the question is can we get it done. that's one of the things we say. clarify the rules and let people get through. people think, well, it's just about getting bigger. on the sell side, that's obvious. the payment goes out to the share holders and employees a lot. that's good for them. but on the buy side, what does it mean? the company is making acquisitions, going to dominate the world, go over and become the best at x, y, or z. they can't get that strategic growth. when you talk america only, those companies are looking to be the best companies in the world, and m&a is one of the ways they do it. if you stop them, you stop the posterity and growth. frankly, we need business. we need labor. we need government. we need it all to work together. we need oil and gas. we need nuclear, that idea of trying to figure out how it works together, because the numbers of employees for our companies and us growing is critical to the health of america. jonathan: do you not get that message from washington right

now? >> it's mixed. i think that's been the debate. america wants to win like it's never had to win because of the resilience of our economy. when you look at 2007 to now, the sizes of the european economy, roughly the same size. now america is 50% bigger. that's the resiliency of the american economy. i think policies that promote that are what's going to drive america to be great. we can solve every problem, if we're growing, and one of the ways we grow is by letting m&a happen is by letting our companies do it with the consumers, with other companies, but do it the other way. jonathan: you sound like a policymaker. >> look, i've been at this a long time now, and i've seen the ups and downs. i think it's really interesting. when you think about companies around the world, they want to invest in the united states talent, work rules, big market, you know, huge market, and i think there's real opportunity for american companies if we get this right. jonathan: every time we talk, the interview ends at the same

place. treasury secretary, thoughts on washington? >> i have the greatest job in the world, and i've got a lot of work to do for bank of america. i'll let somebody else have that honor. jonathan: i imagine that was a bottled answer ready to go. brian, good to see you. brian moynihan there, bank of america. guys, back to you in new york. scarlet: that was bank of america's brian moynihan speaking with jonathan farrow. he did ask treasury secretary. let's talk about janet yellen. taming inflation is a biden administration top priority. here's what she told bloomberg's ann marie earlier this morning. >> the cost of living in many areas is very high. it is a concern to americans, and it is president biden's top priority to do all he can to bring down the cost of living. why i'm here in stafford county, though, is it really illustrates

one way in which that's going to occur. i'm looking at an area that has been deprived, has had really no access to the internet at all sufficiently remote part of virginia, and president biden has made a commitment that every american household in this business should have access to the internet. and funds that were included in the american rescue plan that was passed in 2021, and then later the biden administration infrastructure bill provided substantial funding to make sure that the internet is available everywhere, and that it's also affordable. and what we saw during the pandemic is that access to the

internet is critical to education, to jobs, to healthcare. it's really a critical tool that every family needs to have access to. making that available and making sure that it's affordable, which is what i'm going to see here today, a project that is succeeded in reaching about 700 households in this area, this is one way in which president biden's working to lower the cost of living, but there are many other areas as well, prescription drugs, brought down the cost of insulin to $35 a month, working very hard to bring down the cost of energy, at the same time we're protecting the environment. and bolstering the finances of

households by extending the child tax credit and earned income tax credit. >> if inflation is still top of mind of americans today, why then tomorrow, or it's likely expected, the biden administration is going to lift the walls even high when her it comes to chinese goods. why then raise tariffs? >> the president believes it's critically important for the united states to have a scroll a presence in strategic industries like semiconductors and like clean energy that are going to be the foundation of good jobs and national security in the decades ahead. scarlet: that was janet yellen speaking with our ann marie. coming up, we are at the courthouse where bill hwang is on trial. bill hwang of archegos.

details ahead. this is bloomberg. ♪ scarlet: opening statements in

archegos founder's bill hwang's criminal trial are currently underway in new york. he faces charge of fraud and racketeering conspiracy that could end with him being behind bars for the rest of his life. joining us here in studio is our two analysts, one outside the federal court in downtown new york. why don't you get us start? what have you seen so far? what do we know so far? sonali: there are a few things to consider. if you think about archegos as a family, think about it as a family broken apart. remember, this is a family office, and you not only had

bill hwang, who is facing charges, you also have his chief financial officer. separate from that, you have two of his former employees that already pled guilty and are cooperating witnesses. when we heard this morning from the prosecution, bill hwang's lawyer, as well as the chief financial officer's lawyer, what you heard was a few things. one, the prosecution trying to prove the case here that bill hwang lied to the bank. second, you heard from bill hwang talking about the idea of he had really believed his defense lawyer saying he really believed in the wagers that he put on and was not working on behalf of investors in the family office. he was working on behalf of his own family office in wagers that he believed in, and his defense as well as the c.f.o.'s defense lawyer, really showing the jury here that the banks made a lot of money from the fees that were involved in really helping archegos engage in the markets in the way they did, and

importantly, they also tried to show the jury here that the cooperating witnesses in particular are in it for themselves, that they didn't necessarily act on behalf of bill hwang and the c.f.o. and so it's going to be a very interesting trial with that setup underway, scarlet. of course, we knew that there were fighting words just starting at the beginning of the argument here. they've tan a lunch break after their opening arguments, and we may hear from witnesses as early as today. scarlet: let me check in with joshua. you heard from sonali, and she talked about how archegos is a broken family with the founder and c.f.o. on one side, and the head trader on the other. how does that play out for a jury that is accustomed to seeing a good guy versus a bad guy? >> sure, the defense usually sets up that the cooperating witnesses are out for

themselves. they have other motives. and the government wants to keep them all as one family. i think that's the natural dispute that's going on. the difference here is it's a family office not that big. this isn't like a big bank where someone is saying i didn't know what was going on, this is really a family squabble. scarlet: this is a family squabble, and i guess one thing that we keep in mind when this is a jury trial, juries tend to be sympathetic to certain kinds of defendants. is the jury going to be sympathetic to this defendant in particular, bill hwang, who runs a family office, and the victims of his alleged crime are big wall street firms, like goldman sachs, like credit suisse. >> i think that's exactly right. you have a villains on trial. it's not widows and orphans lost money. this is real banks, and it's heart to feel sorry for them.

as a defendant, when his wealth is on trial, it's also hard for the jurors to feel sorry for him as well. scarlet: sonali, bill hwang is fairly well known on wall street. he was a tiger cub. but the losses that he racked up happened while he was running his own family office, as you were telling us, which family offices, they're subject to even fewer regulatory disclosure requirements than hedge funds. can you talk a little bit about how family funds work and how it may be different from hedge funds. sonali: this is a critical aspect of this case. even in the initial indictment, you saw a recognition here that the disclosure rules are different. if you think about family offices, we know exactly where all their positions are, and if they've amassed a certain size within a certain stock of a position, you would eventually know about it, because they would disclose it. if your family office, a lot of these positions were not bought on by just buying a lot of

stock. they were bought on through the swaps market. something interesting you have to realize is posthumously, you have regulators say, wait a minute, there needs to be more disclosure, and there needs to be a better handle on the slots market as well. you did see the s.e.c. come down and really tighten rules around this market, partially through post-dodd frank reforms that only made it to the light of day post-archegos. but you also have the s.e.c. and the cftc fighting over jurisdiction around some of the rules and family offices, by the way, that enhanced disclosure requirement really didn't see the light of day. scarlet: this sounds like it's going to be a fairly complicated case for the jury to understand. how does the prosecution simplify things so that it becomes very much a comprehensible case rather than

have all these things like options thrown in there and understanding the disclosure requirements of a family office versus hedge fund. >> they'll try to get it as simple as possible. i'm sure they talked about greed, lies, and fraud, which is the classic sort of riff. as a prosecutor, you explain he was lying to his prime brokers, he was lying to the market, he did it to line his own pockets. you don't have to be a juror who trades to understand how a swap works to understand he wasn't in the market. the volume and timing was meant to move prices, and an average person will understand that. but yeah, if you want to keep it high level, the problem is they're going to use a lot of high prices in this case. they're sort of forced into it, because it's a complicated case, and that's when they make it lost or more.

scarlet: what's the scuttlebutt on wall street? i know you talk with investors and folks who are working at a lot of the firms that are affected. how obsessed are they with this case? sonali: a few things here. it's of interest, because we may see more than two dozen counter parties, people who work in the banks and have dealt with archegos coming to take the stand throughout the course of this trial. there's also the issue we've been talking about, family offices. they've enjoyed the lack of disclosure for many years here, and remember, many hedge funds have converted into family offices. this is a massive industry on wall street now, and they might not see the same type of treatment tomorrow as they do today. scarlet: sonali, bloomberg news, outside the federal district courthouse in downtown manhattan. and joshua of palace partners joining us here in studio. really appreciate it. coming up in just a few minutes at the top of the hour, we've got a conversation with the french president, emmanuel

macron, from the choose france summit. that's coming up next. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management.

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>> from the world of politics, to the world of business. this is "balance of power."